“This report rightly stresses the importance of protecting and supporting further education. The squeeze on further education funding is a problem that we desperately need to fix.

“But we know there are economic gains from skills investment at all levels, often achieved most efficiently when universities and colleges work in partnership. Reallocating widening participation funds from universities to colleges would run counter to what works best for student progression and long-term productivity growth.

“Policy Exchange also overestimates the scale of university reserves. The overall approach just won’t work and should be rejected.”